EVERYTHING
According to Finance, the removal of stocks from major benchmarks like the S&P 500 often creates a window of artificial selling pressure. Because index funds and exchange-traded funds (ETFs) must mechanically sell shares of any company dropped from the benchmark, prices can dip regardless of the underlying business's health. This phenomenon provides a unique opportunity for investors who prioritize long-term dividend yields over short-term market noise.
Campbell's Company and high yield stability
One of the primary names highlighted in this transition is The Campbell's Company (NASDAQ: CPB). Following its removal from the S&P 500, the company currently boasts a dividend yield exceeding 7%. While the stock has faced recent headwinds—including lower volumes, costs associated with the 2024 Sovos Brands acquisition, and operational hurdles from an ERP system conversion—its dividend history remains robust. The company has maintained its payout for over 51 years.
Key financial metrics regarding Campbell's include:
- A payout ratio of approximately 76% of earnings.
- Strong cash-flow coverage to support the dividend.
- Significant brand equity through the acquisition of a 49% stake in La Regina, the producer of Rao's sauces.
While Campbell's is characterized as a high-yield, low-growth story with a slow dividend growth rate of just 1.26% over five years, its established brand presence and consistent payout history offer a different profile than typical compounding machines.
Pool Corporation and the dividend growth engine
In contrast to Campbell's high yield, Pool Corporation (NASDAQ: POOL) represents a "dividend growth machine." Although its current yield is more modest at around 2.4%, the company has raised its dividend every year for 22 consecutive years. Over the last decade, it has achieved an annual dividend growth rate of roughly 17%. This trajectory allows long-term investors to see their yields increase significantly relative to their original cost basis.
Pool Corporation operates in the distribution of pool supplies and equipment, with 60% of its revenue derived from maintenance and repair. The company has shown resilience with first-quarter 2026 net sales rising by 6%. Furthermore, its proprietary platform, Pool360, now accounts for 13% of net sales. While the business is more sensitive to housing market trends than Campbell's, its consistent ability to grow earnings provides a reliable foundation for compounding returns.
Investors must weigh these two distinct strategies: one offering immediate high income and the other providing steady, long-term growth in payouts. Both companies remain viable options as they transition into less visible roles within the broader market structure.